cadence design system Shares rose more than 6% on Wednesday after the chip design software company announced profits that beat analysts’ expectations.
The San Jose-based company reported its financials after the bell Tuesday, reporting fourth-quarter 2025 adjusted earnings per share of $1.99 and revenue of $1.44 billion, both metrics up about 6% year over year.
Analysts surveyed by LSEG had expected EPS of $1.91 and revenue of $1.42 billion.
CEO Anirud Devgn told CNBC’s “Squawk on the Street” on Wednesday that about 45% of the company’s business now comes from what he calls “systems companies,” such as hyperscalers and end-manufacturers of phones and cars.
“Systems companies want to optimize their hardware and software stacks together, and one way to do that is by designing their own chips that are critical components and are optimized for their workloads,” Devgan said.
Cadence Design Systems is riding a wave of artificial intelligence capital investment and R&D from a wide range of technology companies who are creating large-scale language models and deploying them in internal and customer-facing apps and products.
Devgan pointed out appleInitiatives using unique smartphone chips, googleThe trend for systems companies to develop their own chips is “only going to accelerate,” he said, with the company’s custom AI silicon being a prime example.
The company said it expects revenue to be between $5.9 billion and $6 billion next year, on the high end of FactSet’s $5.94 billion estimate.
Cadence competes with other companies that sell chip design software. synopsis and siemens.
